Correlation Between Gamma Communications and Ping An

Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Ping An at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Gamma Communications and Ping An into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gamma Communications plc and Ping An Insurance, you can compare the effects of market volatilities on Gamma Communications and Ping An and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Gamma Communications with a short position of Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Ping An.

Diversification Opportunities for Gamma Communications and Ping An

0.36

Correlation Coefficient

Gamma Communications  Ping An

Weak diversification

The 3 months correlation between Gamma and Ping is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and Ping An Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ping An Insurance and Gamma Communications is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Gamma Communications plc are associated (or correlated) with Ping An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ping An Insurance has no effect on the direction of Gamma Communications i.e., Gamma Communications and Ping An go up and down completely randomly.

Pair Corralation between Gamma Communications and Ping An

Assuming the 90 days horizon Gamma Communications plc is expected to generate 0.43 times more return on investment than Ping An. However, Gamma Communications plc is 2.33 times less risky than Ping An. It trades about -0.1 of its potential returns per unit of risk. Ping An Insurance is currently generating about -0.08 per unit of risk. If you would invest  2,000  in Gamma Communications plc on October 6, 2024 and sell it today you would lose (170.00) from holding Gamma Communications plc or give up 8.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gamma Communications plc  vs.  Ping An Insurance

Gamma Communications plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gamma Communications plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Ping An Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ping An Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Gamma Communications and Ping An

The main advantage of trading using opposite Gamma Communications and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Ping An can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ping An will offset losses from the drop in Ping An's long position.

The idea behind Gamma Communications plc and Ping An Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.